23 August 2014
Can anyone guide me on the following : 1. Mr. A and his son Mr.B jointly purchased House property and takes Housing Loan. Who can claim Deduction for Housing Loan repayment. Whether person making payment or both can claim deduction in same proportion.
2. In above case, if after 10 years the house is sold and all proceeds are deposited in the account of Mr.B (Son of Mr.A), then who is liable for capital gain?
3. Further, if Mr.B invests the money in other House property, then can he claim deduction U/s.54? If yes, then to what extent?
18 July 2024
Certainly! Here are the answers to your queries regarding housing loan deduction and capital gains on house property:
### 1. Deduction for Housing Loan Repayment:
- **Ownership and Loan Repayment**: If Mr. A and his son Mr. B jointly own the house property and have taken a housing loan together, the deduction for housing loan repayment can be claimed by both individuals in proportion to their ownership share in the property.
- **Proportionate Deduction**: Typically, the deduction under Section 24(b) of the Income Tax Act, 1961, for interest on housing loan and under Section 80C for principal repayment can be claimed in proportion to the ownership share. For example, if Mr. A and Mr. B each own 50% of the property, they can claim 50% of the eligible deductions each.
### 2. Capital Gains on Sale of House Property:
- **Proceeds Deposited in Mr. B's Account**: If the house property is sold and all the proceeds are deposited into Mr. B's account, the liability for capital gains tax arises based on the ownership share in the property.
- **Ownership Share**: The capital gains will be computed based on the proportionate ownership share of Mr. A and Mr. B in the property. If they have equal ownership (50-50), the capital gains will be split accordingly.
### 3. Exemption under Section 54:
- **Investment in Another House Property (Section 54)**: If Mr. B reinvests the sale proceeds into another house property within the specified time frame, he can claim exemption under Section 54 of the Income Tax Act.
- **Extent of Exemption**: The exemption under Section 54 allows for the exemption of capital gains arising from the sale of a residential house property if the entire sale proceeds (or proportionate to the share of the property sold) are reinvested in another residential house property.
- **Conditions**: - The new property must be purchased either 1 year before the sale or 2 years after the sale of the original property, or constructed within 3 years after the sale. - The amount invested in the new property should be equal to or more than the capital gains realized from the sale. - The exemption is limited to the amount of capital gains invested in the new property; if the entire amount is not reinvested, the exemption is proportionately reduced.
### Summary:
- Both Mr. A and Mr. B can claim housing loan deductions in proportion to their ownership share. - Capital gains on the sale of the property will be split according to their ownership share. - Mr. B can claim exemption under Section 54 if he reinvests the entire capital gains (or proportionate to his share) in another residential house property within the specified time frame.
For precise calculations and compliance, it's recommended to consult with a tax advisor or chartered accountant who can provide personalized guidance based on the specific details of ownership, loan arrangement, and sale transaction.
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